GEO Pay’s CEO: We Solved Problems that Nobody had Solved Before
Imagine that there are any financial assets in the world: money, digital assets, or security token offerings (STOs). There are no fees or middlemen like banks. Despite there is a network of people who pay for real goods and services by conditional online units. Payments are transferred quickly and for free. There is a technology that provides connections between participants of this network. A financier, Maxym Demyan, sees the alternative economics of the future in this way.
In 2013, Maxym and his partner Dmytro Chizhevsky started the project Geo, which is based on decentralized financial technology.
In the interview, Maxym Demyan explained what the Internet of Value stands for and why cryptocurrencies will never replace fiat money.
The Internet of Value
The Internet allows us to join a network and transfer information to any other network’s point. The main protocol of the Internet is TCP/IP. If you fail to transfer some information on the Internet for the first time, you can do it one more time. If a user transferred some information to another user, they both have this information. However, when we transfer values, it’s important not to have double-spelling and be sure that the transaction has been processed successfully. It is called atomicity. We work on the Internet of Value.
Our idea is to digitize values and to give users the possibility to pay for goods and services immediately and for free. Our system will help everybody to create equivalents to the values and will safely connect all people in a big network at the same time.
However, the implementation of the project turned out to be much complicated, so we divided it into two projects — Geo Protocol та Geo Pay.
Geo Protocol is an open-source, cost-effective, and easily scalable protocol. It can be used by payment service providers, financial companies, banks, and marketplaces for building their own processes or integrations with other companies.
We promote Geo Protocol in western markets because there are better opportunities for attracting investments and more numerous ways to use the technology. Firstly, the Ukrainian Venture Capital almost doesn’t exist. Secondly, Ukraine’s Legal System and the banking system of Ukraine are not ready for using Geo Protocol.
In March, we released the beta version of the Geo Protocol and got $4 million from US-based investment firm CoinFund. The money will be spent on the development of technology. In 2019, we are going to release Mainnet — the first working version of the network, which will be applicable for real-world use cases. In 2 years, we are going to expand technology’s opportunities — provide the exchange of values and create the Internet of things.
Geo Pay is a mobile app based on Geo Protocol, which provides the billing infrastructure for an ultimate consumer. The pilot run was carried out in Ukraine because we understand local specifics of the market and people’s needs best.
Geo Pay Benefits for Users and Merchants
We propose that consumers use a telephone instead of cards or cash and that merchants get rid of POS-terminals and process payments with QR Codes. It’ll make payments much easier, convenient, and cheaper for both.
There are no fees in the network if you put less than 1,500 UAH. If the amount of money is bigger than that, fees are defined by tellers. We have bigger individual and overall cashback than online banks because cashback is defined by sellers of goods and services.
Now we have only one equivalent — Ukrainian hryvnia — but we position ourselves like a multi-currency online wallet. In the future, a user of the network will be able to conduct international exchanges, transfers, or cross-board payments that are connected with a few currencies.
The reduction of fees is a plus for sellers of goods and services. Shops pay 1,5–3% of the revenue for using POS-terminals and acquiring + monthly charges for equipment.
Trust that is measured in equivalents
We started to build the network with trusted relationships. A user had exactly as many resources as his network’s friends, and acquaintances trusted him. If there were 5 friends in the user’s system and they trusted him 1,000 UAH, the user would be able to spend 1,000 UAH. The system sets connections between users and sellers of goods and services with the chain of acquaintances between people.
It imposed some restrictions. Even if your friends trust you, it doesn’t mean that you can buy something wherever you want because sometimes there are no connections between a seller and you.
We improved the system and added a possibility to tie up a credit card. Now a user can top up an account balance and make purchases like it’s possible to do via online banks.
We take these steps to become interesting. First of all, people use what is convenient to use. However, we believe that in the future, the system will work without money. The more ramified network’s infrastructure will be, the fewer people will use cards.
Monetization and Strategy Development
Our protocol is a huge gateway in which you can enter and exit different equivalent forms. Except for cards, it can be a stock market or a blockchain asset. Values exchanges inside the network don’t have fees. We monetize the project in a way that our partners charge for entrance and exit and share half of the net worth with us.
10 people work in the Geo Pay team now. We have more than 10,000 users in the app. However, we concentrate not on the number of users, but on the development of infrastructure. As far as we don’t have the infrastructure, people won’t be interested in our service. We work on possibilities inside the app; on goods and services that users can buy using our payment service and on places where they can do it.
We actively make integrations with other apps: supermarket chains, local entrepreneurs, and petrol stations. Integrating with other apps, we reckon they have a client base, which only grows with time.
Blockchain, Cryptocurrencies and Geo Pay
Newton said that all our achievements stand on the shoulders of our ancestors. Blockchain algorithms were used in the 80s yet. However, the disrupt has happened with the appearance of cryptocurrencies.
Then people experienced the impact of technology on their lives. Before bitcoin, there were a few attempts to create a digital decentralized B2B payment system. Nevertheless, bitcoin became the most popular cryptocurrency because it had consensus and cryptographic mechanisms. Unlike its forerunners, bitcoin was resistant to external attacks but remained decentralized at the same time.
I am an adherent of the bitcoin experiment, but I don’t believe that it will replace fiat money. It might become an online alternative for such a store of value as gold but not a medium of payment.
From the economic perspective, any cryptocurrency that exists now won’t replace fiat money as a medium of payment or a measure of value. The value of fiat money depends on two basic economic things — demand (the amount of money) and proposal (goods and services on the market). The emission of cryptocurrencies is fixed and stipulated by the algorithm. This algorithm doesn’t coincide with fluctuations in supply and demand on the market. It causes significant volatility (frequent change of price) of cryptocurrencies. In such conditions, it is tritely inconvenient to use cryptocurrencies as a measure of value. It is one of the reasons why we didn’t choose the way of cryptocurrencies.
When the concept of «economy for all» was born, we start reviewing existing blockchain guidance. Our technology doesn’t contradict blockchain. It solves other tasks.
Blockchain is a list of records that synchronizes in different places. It is responsible for the reliability of data storage and protection from third parties.
Our protocol is in charge of logistics. Imagine that each back or blockchain is a separate list of records. Our technology connects these lists of records and provides the reliability of transactions between them.
Such difficulties of blockchain technologies as restrictions in scaling, efficiency, the speed of transactions are still unsolved. Blockchain community concluded that it’s impossible to solve them.
Last year, the blockchain industry started to move towards layer 2 technologies on which we work on for 4 years.
How not to Close a Project?
If 4 years ago I had known what is waiting for us, I would probably haven’t started the project. Firstly, we worked in poor conditions for 3 years. Secondly, we solved problems that nobody has solved. It was half research work. We looked for a decision, not knowing if it existed. However, we didn’t think about difficulties like compelling obstacles because we liked the possibility that it might work.
There were plenty of moments when the desire to give up everything overwhelmed. Any projects have these moments. But we call successful the projects in which founders overstep these obstacles.
The most important thing is to be passionate about what you do. It’s one of the leading life principles. If we haven’t been passionate about our work, this project would have been closed a long time ago.